UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-Q

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010
                               --------------

                                       Or

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from _________________to_________________

Commission File No. 0-8693
                    ----------

                              TRANSNET CORPORATION
                              --------------------
             (Exact name of registrant as specified in its charter)

        DELAWARE                                       22-1892295
--------------------------------          -------------------------------------
(State or other jurisdiction of            (IRS Employer Identification Number)
incorporation or organization)

45 Columbia Road, Somerville, New Jersey                08876-3576
----------------------------------------               ------------
(Address of principal executive offices)                (Zip Code)

Registrant's Telephone Number, Including Area Code:    908-253-0500
                                                       ------------

--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last Report

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                                                 Yes [X]  No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company (as
defined in Rule 12b-2 of the Act)

         Large Accelerated Filer [ ]           Accelerated Filer [ ]
         Non-accelerated Filer [ ]             Smaller Reporting Company [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act)

[ ] Yes   [X] No

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 13, 2010: 4,823,304.

<PAGE>

                       TRANSNET CORPORATION AND SUBSIDIARY
                                    FORM 10-Q

                                TABLE OF CONTENTS

                                                                        Page No.
                                                                        --------
PART I. FINANCIAL INFORMATION

      Consolidated Balance Sheets
         March 31, 2010 (unaudited) and June 30, 2009                       1

      Consolidated Statements of Operations (unaudited)
         Three Months Ended March 31, 2010 and 2009                         2
         Nine Months Ended March 31, 2010 and 2009                          3

      Consolidated Statements of Cash Flows (unaudited)
         Nine Months Ended March 31, 2010 and 2009                          4

      Notes to Consolidated Financial Statements (unaudited)                5

   Item 2. Management's Discussion and Analysis                            10

   Item 4. Controls and Procedures                                         15

PART II. OTHER INFORMATION

   Item 5.  Other Information                                              16

   Item 6.  Exhibits and Reports on Form 8-K                               16

   Signatures                                                              17
   Certifications                                                          18
   Exhibits                                                                23

                                       i.

<PAGE>

                      TRANSNET CORPORATION AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                       March 31,        June 30,
                                                        2010              2009
                                                   ---------------   --------------
                                                     (unaudited)
<S>                                                <C>               <C>
ASSETS:

CURRENT ASSETS

Cash and Cash Equivalents                          $       121,850   $    1,654,366
Restricted Cash                                            872,973          863,621
Accounts Receivable - Net                                3,459,379        4,392,995
Inventories - Net                                          172,297          261,456
Other Current Assets                                        38,372           11,152
                                                   ---------------   --------------

TOTAL CURRENT ASSETS                               $     4,664,871   $    7,183,590

PROPERTY AND EQUIPMENT - NET                                80,834          120,690

OTHER ASSETS                                               218,713          216,755
                                                   ---------------   --------------

TOTAL ASSETS                                       $     4,964,418   $    7,521,035
                                                   ===============   ==============

LIABILITIES AND STOCKHOLDERS' EQUITY:

CURRENT LIABILITIES:

Line of Credit                                     $       799,362   $      828,094
Accounts Payable                                         1,666,637        3,481,381
Accrued Expenses                                           358,417          403,181
Unearned Revenue                                            95,650          365,442

TOTAL CURRENT LIABILITIES                          $     2,920,066   $    5,078,098
                                                   ---------------   --------------

STOCKHOLDERS' EQUITY:

Capital Stock - Common, $.01 Par Value,
Authorized 15,000,000 Shares;  Issued 7,408,524
at March 31, 2010 and June 30, 2009

[of which 2,585,220 are in Treasury at March 31,
2010 and June 30, 2009]                                     74,085           74,085

Additional Paid-in Capital                              10,574,670       10,574,670

Accumulated Deficit                                     (1,451,568)      (1,052,983)
                                                   ---------------   --------------

Total                                                    9,197,187        9,595,772
Less: Treasury Stock - At Cost                          (7,152,835)      (7,152,835)
                                                   ---------------   --------------

TOTAL STOCKHOLDERS' EQUITY                               2,044,352        2,442,937
                                                   ---------------   --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $     4,964,418   $    7,521,035
                                                   ===============   ==============
</TABLE>

See Notes to Consolidated Financial Statements.

                                                                               1

<PAGE>

                      TRANSNET CORPORATION AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED MARCH 31,
                                                   --------------------------------
                                                         2010             2009
                                                   ---------------   --------------
<S>                                                <C>               <C>
REVENUE
Equipment                                          $     2,708,041   $    2,412,501
Services                                                 2,184,867        2,764,107
                                                   ---------------   --------------
Total Revenue:                                           4,892,908        5,176,608
                                                   ---------------   --------------
COST OF REVENUE
Equipment                                                2,242,329        2,151,508
Services                                                 1,839,467        2,296,009
                                                   ---------------   --------------
Total Cost of Revenue                                    4,081,796        4,447,517
                                                   ---------------   --------------
Gross Profit                                               811,112          729,091

Selling, General and Administrative Expenses             1,295,194        1,316,505
                                                   ---------------   --------------
Operating Loss                                            (484,082)        (587,414)
                                                   ---------------   --------------
OTHER INCOME (EXPENSE)
Interest Income                                              3,096            6,595
Interest Expense                                           (18,716)          (6,473)
Disposal of Asset                                               --            2,102
                                                   ---------------   --------------
Total Other (Expense) Income                               (15,620)           2,224
                                                   ---------------   --------------

Net Loss                                           $      (499,702)  $     (585,190)
                                                   ===============   ==============
Basic and Diluted Net Loss Per Common Share        $         (0.10)  $        (0.12)
                                                   ===============   ==============
Weighted Average Common Shares Outstanding -

Basic and Diluted                                        4,823,304        4,823,304
                                                   ===============   ==============
</TABLE>

See Notes to Consolidated Financial Statements.

                                                                               2

<PAGE>

                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                 NINE MONTHS ENDED MARCH 31,
                                               ------------------------------
                                                    2010            2009
                                               --------------   --------------
<S>                                            <C>              <C>
REVENUE
Equipment                                      $    9,208,216   $   11,773,415
Services                                            7,324,727        7,112,429
                                               --------------   --------------
Total Revenue:                                     16,532,943       18,885,844
                                               --------------   --------------
COST OF REVENUE
Equipment                                           7,454,833       10,457,198
Services                                            5,507,988        5,640,735
                                               --------------   --------------
Total Cost of Revenue                              12,962,821       16,097,933
                                               --------------   --------------
Gross Profit                                        3,570,122        2,787,911

Selling, General and Administrative Expenses        3,932,165        4,534,054
                                               --------------   --------------
Operating Loss                                       (362,043)      (1,746,143)
                                               --------------   --------------
OTHER INCOME (EXPENSE)
Interest Income                                         9,953           19,940
Interest Expense                                      (44,413)         (41,506)
Disposal of Asset                                          --            2,102
                                               --------------   --------------
Total Other (Expense)                                 (34,460)         (19,464)
                                               --------------   --------------

Net Loss                                       $     (396,503)  $   (1,765,607)
                                               ==============   ==============
Basic and Diluted Net Loss Per Common Share    $        (0.08)  $        (0.37)
                                               ==============   ==============
Weighted Average Common Shares Outstanding -
   Basic and Diluted                                4,823,304        4,823,304
                                               ==============   ==============
</TABLE>

See Notes to Consolidated Financial Statements.

                                                                               3

<PAGE>

                       TRANSNET CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                 NINE MONTHS ENDED MARCH 31,
                                               -------------------------------
                                                    2010             2009
                                               --------------   --------------
<S>                                            <C>              <C>
OPERATING ACTIVITIES:
Net Loss                                       $     (396,503)  $   (1,765,607)
                                               --------------   --------------
Adjustments to Reconcile Net Income
   to Net Cash:
Depreciation and Amortization                          62,485          109,880
Gain on Sale of Equipment                                  --           (2,102)
Provision for Doubtful Accounts                       (91,128)         (59,181)

Changes in Assets and Liabilities:
(Increase) Decrease in:
Restricted Cash                                        (9,352)         (19,825)
Accounts Receivable                                 1,024,743        1,994,302
Inventory                                              89,159         (221,620)
Other Current Assets                                  (27,220)         (15,135)
Other Assets                                           (1,958)          (3,109)

Increase (Decrease) in:
Accounts Payable and Accrued Expenses              (1,861,591)       1,592,726
Unearned Revenue                                     (269,792)              --

Total Adjustments                              $   (1,084,654)  $    3,375,936
                                               --------------   --------------

NET CASH - OPERATING ACTIVITIES                $   (1,481,157)  $    1,610,329
                                               --------------   --------------

INVESTING ACTIVITIES:
Capital Expenditures                           $      (22,627)  $       (7,756)
Proceeds from the Sale of Equipment                        --           26,000
                                               --------------   --------------

NET CASH - INVESTING ACTIVITIES                $      (22,627)  $       18,224
                                               --------------   --------------

FINANCING ACTIVITIES:
Line of Credit- Net                            $      (28,732)  $   (1,658,009)

NET DECREASE IN CASH AND CASH EQUIVALENTS      $   (1,532,516)  $      (29,436)

CASH AND CASH EQUIVALENTS AT BEGINNING OF
   PERIODS                                     $    1,654,366   $      314,618
                                               --------------   --------------
CASH AND CASH EQUIVALENTS AT END OF PERIODS    $      121,850   $      285,182
                                               --------------   --------------
Supplemental Disclosures of Cash Flow
   Information:
Cash paid during the period for:
Interest                                       $       46,270   $       41,506
Income Taxes                                   $        2,080   $        1,457
</TABLE>

See Notes to Consolidated Financial Statements.

                                                                               4

<PAGE>

                      TRANSNET CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

(1.)  BASIS OF PRESENTATION

      The accompanying unaudited financial statements have been prepared in
      accordance with accounting principles generally accepted in the United
      States of America for interim financial information and with the
      instructions to Form 10-Q and Article 8 of Regulation S-X. They do not
      include all of the information and footnotes required by accounting
      principles generally accepted in the United States of America for complete
      financial statements. In the opinion of management, all adjustments
      (consisting only of normal recurring accruals) considered necessary in
      order to make the interim financials not misleading have been included.
      The operating results for the three months and nine months ended March 31,
      2010 are not necessarily indicative of the results that can be expected
      for the year ending June 30, 2010.

      The balance sheet as of June 30, 2009 has been derived from the audited
      financial statements at such date, but does not include all of the
      information and footnotes required by accounting principles generally
      accepted in the United States of America for complete financial
      statements.

      For further information, please refer to the consolidated financial
      statements and footnotes thereto included in the Annual Report on Form
      10-K of TransNet Corporation and Subsidiary (the "Corporation") for the
      year ended June 30, 2009.

      Certain reclassifications have been made to prior period financial
      statements to conform to the current year presentation.

(2.)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The complete list of significant accounting policies followed by the
      Corporation are set forth in Note 2 to the Corporation's consolidated
      financial statements in the Form 10-K for the fiscal year ended June 30,
      2009. The Corporation considers the following to be critical accounting
      policies as that term is defined by the Securities and Exchange Commission
      ("SEC").

      (a) Revenue Recognition: The Corporation's revenues are derived from both
      the sale of equipment and services provided to customers. Revenues related
      to equipment sales are recognized when evidence of an arrangement exists,
      delivery has occurred, the sales price is both fixed and determinable, and
      collectability is reasonably assured.

      Revenues related to services provided are recognized ratably over the term
      of the underlying customer contract or when obligations have been
      satisfied. For service performed on a time and materials basis, revenue is
      recognized upon performance.

      The Corporation also enters into revenue arrangements in which customers
      may purchase a combination of equipment and services (multiple-element
      arrangements). When vendor-specific objective evidence ("VSOE") of fair
      value exists for all elements, revenue is allocated to each element based
      on the relative fair value of each of the elements. VSOE of fair value is
      established by the price charged when that element is sold separately. For
      services, VSOE of fair value is established by the rates charged when they
      are sold separately. For arrangements where VSOE of fair value exists only
      for the undelivered elements, we defer the full fair value of the
      undelivered elements and recognize the difference between the total
      arrangement fee and the amount deferred

                                                                               5

<PAGE>

      for the undelivered items as revenue, assuming all other criteria for
      revenue recognition have been met.

      (b) Allowance for Doubtful Accounts: An allowance for doubtful accounts is
      provided against accounts receivable for amounts Management believes may
      be uncollectible. The Corporation monitors current conditions and
      determines the adequacy of this allowance by regularly reviewing the
      composition of its accounts receivable aging and evaluating individual
      customer receivables, considering each customer's financial condition and
      credit history.

      (c) Deferred Income Taxes: Pursuant to ASC Topic 740, "Income Taxes,"
      income tax expense [or benefit] for the year is the sum of deferred tax
      expense [or benefit] and income taxes currently payable [or refundable].
      Deferred tax expense [or benefit] is the change during the year in a
      company's deferred tax liabilities and assets. Deferred tax liabilities
      and assets are determined based on differences between financial reporting
      and tax bases of assets and liabilities, and are measured using the
      enacted tax rates and laws that will be in effect when the differences are
      expected to reverse.

      The future realization of the deferred tax assets related to federal and
      state NOL carry-forwards is contingent upon the Corporation's future
      results of operations. The Corporation performs an analysis each year to
      determine if future income will more likely than not be sufficient to
      realize the recorded deferred tax asset. Management has established a
      deferred tax valuation on the total deferred tax asset as it may not be
      realized.

(3.)  NEW ACCOUNTING UPDATES

      On June 29, 2009, the FASB issued an accounting pronouncement establishing
      the FASB Accounting Standards Codification (the "ASC") as the source of
      authoritative accounting principles recognized by the FASB to be applied
      by nongovernmental entities. This pronouncement was effective for
      financial statements issued for interim and annual periods ending after
      September 15, 2009, for most entities. On the effective date, all non-SEC
      accounting and reporting standards will be superseded. The Corporation
      adopted this new accounting pronouncement for the quarterly period ended
      September 30, 2009, as required, and adoption did not have a material
      impact on its financial statements taken as a whole.

      In October 2009, the FASB issued ASU No. 2009-13, "Revenue Recognition
      (Topic 605): Multiple-Deliverable Revenue Arrangements (a consensus of the
      FASB Emerging Issues Task Force)," which amends ASC 605-25, "Revenue
      Recognition: Multiple-Element Arrangements." ASU No. 2009-13 addresses how
      to determine whether an arrangement involving multiple deliverables
      contains more than one unit of accounting and how to allocate
      consideration to each unit of accounting in the arrangement. This ASU
      replaces all references to fair value as the measurement criteria with the
      term selling price and establishes a hierarchy for determining the selling
      price of a deliverable. ASU No. 2009-13 also eliminates the use of the
      residual value method for determining the allocation of arrangement
      consideration. Additionally, ASU No. 2009-13 requires expanded
      disclosures. This ASU will become effective for us for revenue
      arrangements entered into or materially modified on or after July 1, 2010.
      Earlier application is permitted with required transition disclosures
      based on the period of adoption. We are currently evaluating the
      application date and the impact of this standard on our consolidated
      financial statements.

      In October 2009, the FASB issued ASU No. 2009-14, "Software (Topic 985):
      Certain Revenue Arrangements That Include Software Elements (a consensus
      of the FASB Emerging Issues Task Force)." ASU No. 2009-14 amends ASC
      985-605, "Software: Revenue Recognition," such that tangible products,
      containing both software and non-software components that function
      together to deliver the tangible product's essential functionality, are no
      longer within the scope of ASC 985-

                                                                               6

<PAGE>

      605. It also amends the determination of how arrangement consideration
      should be allocated to deliverables in a multiple-deliverable revenue
      arrangement. This ASU will become effective for us for revenue
      arrangements entered into or materially modified on or after July 1, 2010.
      Earlier application is permitted with required transition disclosures
      based on the period of adoption. We are currently evaluating the
      application date and the impact of this standard on our consolidated
      financial statements. Both ASU No. 2009-13 and ASU No. 2009-14 must be
      adopted in the same period and must use the same transition disclosures.

      In December 2009, the FASB issued ASU No. 2009-17, "Consolidations (Topic
      810): Improvements to Financial Reporting by Enterprises Involved with
      Variable Interest Entities." ASU No. 2009-17 amends the guidance for
      consolidation of VIEs primarily related to the determination of the
      primary beneficiary of the VIE. This ASU will become effective for us on
      April 1, 2010. We are currently evaluating the impact of this standard on
      our consolidated financial statements.

      In January 2010, the FASB issued updated accounting guidance related to
      fair value measurements and disclosures which amends and clarifies
      existing disclosure requirements. This updated accounting guidance
      requires new disclosures related to amounts transferred into and out of
      Level 1 and 2 fair value measurements as well as separate disclosures of
      purchases, sales, issuances, and settlements related to amounts reported
      as Level 3 fair value measurements. This guidance also clarifies existing
      fair value disclosure requirements related to the level of disaggregation
      and the valuation techniques and inputs used to measure fair value for
      both recurring and nonrecurring fair value measurements. This guidance is
      effective for interim and annual periods beginning after December 15,
      2009, except for the separate disclosures of purchases, sales, issuances,
      and settlements related to amounts reported as Level 3 fair value
      measurements, which is effective for fiscal years beginning after December
      15, 2010. The Corporation does not believe the adoption of this guidance
      will have a material impact on its consolidated financial statements.

      In February 2010, the FASB issued an additional accounting pronouncement
      that amended certain requirements for subsequent events (FASB ASC Topic
      855), which requires an SEC filer or a conduit bond obligor to evaluate
      subsequent events through the date the financial statements are available
      to be issued and removes the previous requirement to disclose the date
      through which subsequent events have been evaluated. The amended
      amendments were effective on issuance of the final pronouncement. The
      adoption of this pronouncement had no effect on our consolidated financial
      statements.

(4.)  FAIR VALUE MEASUREMENTS

      We adopted ASC topic 820, "Fair Value Measurements and Disclosures" on
      July 1, 2008 for all financial assets and liabilities and nonfinancial
      assets and liabilities that are recognized or disclosed at fair value in
      the financial statements on a recurring basis (at least annually). Topic
      820 defines fair value, establishes a framework for measuring fair value,
      and expands disclosures about fair value measurements.

      Topic 820 defines fair value as the price that would be received upon sale
      of an asset or paid upon transfer of a liability in an orderly transaction
      between market participants at the measurement date and in the principal
      or most advantageous market for that asset or liability. The fair value
      should be calculated based on assumptions that market participants would
      use in pricing the asset or liability, not on assumptions specific to the
      entity. In addition, the fair value of liabilities should include
      consideration of non-performance risk including our own credit risk.

      In addition to defining fair value, topic 820 expands the disclosure
      requirements around fair value and establishes a fair value hierarchy for
      valuation inputs. The hierarchy prioritizes the inputs into

                                                                               7

<PAGE>

      three levels based on the extent to which inputs used in measuring fair
      value are observable in the market. Each fair value measurement is
      reported in one of the three levels which is determined by the lowest
      level input that is significant to the fair value measurement in its
      entirety. These levels are:

            o     Level 1 - inputs are based upon unadjusted quoted prices for
                  identical instruments traded in active markets.

            o     Level 2 - inputs are based upon quoted prices for similar
                  instruments in active markets, quoted prices for identical or
                  similar instruments in markets that are not active, and
                  model-based valuation techniques for which all significant
                  assumptions are observable in the market or can be
                  corroborated by observable market data for substantially the
                  full term of the assets or liabilities.

            o     Level 3 - inputs are generally unobservable and typically
                  reflect management's estimates of assumptions that market
                  participants would use in pricing the asset or liability. The
                  fair values are therefore determined using model-based
                  techniques that include option pricing models, discounted cash
                  flow models, and similar techniques.

The following table presents assets that are measured and recognized at fair
value on a recurring basis.

                                      MARCH 31,
           DESCRIPTION                  2010      LEVEL 1    LEVEL 2    LEVEL 3
           -----------                ---------   -------   ---------   -------

      Certificate of Deposit          $ 872,973   $    --   $ 872,973   $    --

(5.)  LINE OF CREDIT

The Corporation previously financed inventory purchases through a credit line
with a finance company, with a maximum credit line of $2,500,000, which was
terminated by the Corporation in fiscal 2009. The Corporation currently utilizes
credit available from multiple vendors under terms which provide for interest
free periods ranging from 30 to 60 days. A significant portion of vendor credit
is secured by certain of the Corporation's assets. The vendors may in their sole
discretion from time to time determine the maximum amount of credit which they
elect to extend. The Corporation entered into a line of credit with a financial
institution, which is secured by the Corporation's certificate of deposit listed
as restricted cash.

                                                                               8

<PAGE>

(6.)  INCOME TAXES

      The following reconciles the tax provision with the U.S. statutory tax
      rates:

                                                    THREE MONTHS ENDED MARCH 31,
                                                           2010           2009
        Income taxes at U.S. statutory rate               (35.0)%        (35.0)%
        State taxes, net of federal tax benefit            (6.0)          (6.0)
        Change in valuation allowance on
           deferred tax assets                             41.0           41.0
                                                    -----------    -----------
        TOTAL EXPENSE (BENEFIT)                               0%             0%
                                                    ===========    ===========

                                                     NINE MONTHS ENDED MARCH 31,
                                                           2010           2009
        Income taxes at U.S. statutory rate               (35.0)%        (35.0)%
        State taxes, net of federal tax benefit            (6.0)          (6.0)
        Change in valuation allowance on
           deferred tax assets                             41.0           41.0
                                                    -----------    -----------
        TOTAL EXPENSE (BENEFIT)                               0%             0%
                                                    ===========    ===========

      At June 30, 2009, the Corporation had federal net operating tax loss
      carryforwards of approximately $9.6 million, which will begin to expire on
      June 30, 2024. The Corporation has provided a full valuation allowance
      against its deferred tax asset due to the uncertainty about its
      realization.

                                                                               9

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

SPECIAL NOTE ABOUT FORWARD LOOKING STATEMENTS

Certain statements in Management's Discussion and Analysis ("MD&A"), other than
purely historical information, including estimates, projections, statements
relating to our business plans, objectives, and expected operating results, and
the assumptions upon which those statements are based, are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements generally are
identified by the words "believe," "project," "expect," "anticipate,"
"estimate," "intend," "strategy," "plan," "may," "should," "will," "would,"
"will be," "will continue," "will likely result," and similar expressions
identify forward-looking statements, but are not the exclusive means of
identifying such statements and their absence does not mean that a statement is
not forward-looking. Forward-looking statements are based on current
expectations and assumptions that are subject to risks and uncertainties, which
may cause actual results to differ materially from the forward-looking
statements. Except as required by law, we undertake no obligation to update or
revise publicly any forward-looking statements, whether as a result of new
information, future events, or otherwise.

RESULTS OF OPERATIONS

Overall revenues decreased in the quarter ended March 31, 2010 to $4,892,908
from $5,176,608 in the same period in the prior year, due to a decrease in
service revenues resulting from product constraints and purchasing freezes by
the State of New Jersey, as discussed below. Revenues from equipment sales
increased slightly during the quarter, however. For the quarter ended March 31,
2010, the Corporation reported a net loss of $499,702 as compared with net loss
of $585,190 for the similar period in the prior fiscal year. Revenues and
earnings decreased in the nine-month period ended March 31, 2009 as compared to
the same period in the prior year, primarily due to the factors referenced
above. Revenues for the nine months ended March 31, 2010 were $16,532,943 as
compared with $18,885,844 for the same period in fiscal 2009, with a net loss of
$396,503 for the nine-month period ended March 31, 2010, compared with net loss
of $1,765,607 for the same period in the prior fiscal year.

Operations were significantly effected by the freeze on purchases of equipment
and services implemented by the State of New Jersey following the November 2009
gubernatorial election as the new administration was established and evaluated
the State's financial condition. This reduced equipment and service revenues
from state and local governmental agencies and educational customers (K-12
through higher education) (collectively "Public Sector" clients). As a result,
sales to Public Sector clients during the second and third quarters of fiscal
2010 were lower than anticipated. Subsequent to the March 31, 2010 end of the
period, the State has resumed purchases and the Corporation has received orders
from its Public Sector clients. Management notes that no existing orders were
cancelled as a result of the State freeze, but orders were delayed, however,
which contributed to the decrease in service revenues. Demand for physical
security systems marketed by TransNet continues to be strong, even in light of
budgetary restrictions of Public Sector clients. As of the present time, our
backlog of open orders from commercial and Public Sector clients is at the
highest level in recent years, particularly with respect to orders received in
April 2010. As previously reported, while no assurances can be given, we believe
that TransNet is well positioned in the State's new purchasing contracts for
growth of our business with Public Sector clients and that sales under these
contracts will have a significant and positive impact on results. TransNet is
listed by State selected manufacturers as an approved vendor for a significant
number of IT, communication, and security products pursuant to these contracts.
Management also notes that the federal stimulus package is expected to provide
capital for a number of projects for Public Sector clients. Once fully
implemented, the stimulus package is expected to provide an influx of capital
for these clients and to clients in healthcare to use for programs such as
security and first-responder technology and other

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products sold and supported by the Corporation. Due to uncertainties regarding
the economy, however, no assurances can be given.

In addition to the Public Sector freeze, the Corporation's operations were
significantly impacted by unanticipated product constraints on equipment
manufactured by Cisco Systems, Inc. ("Cisco"). Cisco curtailed its manufacturing
when demand for its products fell as the recession deepened. As demand increased
with the beginnings of the economic recovery, Cisco's reduced levels of
production were insufficient to meet its industry partners' growing demand for
its product.. Based upon information reported by Cisco that is it investing in
and improving the supply chain, Management believes that the constraints will
ease by the end of the Corporation's fiscal year. Cisco product comprises a
significant portion of system components for Voice over IP ("VoIP") systems
provided by TransNet, and result in higher profit margin transactions. In
response to these constraints, Management has implemented expense reduction
measures until product levels improve and return to normal levels.

The losses for the nine-month period ended March 31, 2010 were attributable to
the effects of the State freeze and product constraints, which decreased overall
revenues, particularly service revenues. The reduction in service revenues
significantly impacted profit margins. Despite the Cisco shortages, as a result
of sales of higher profit IT solutions such as physical security systems, gross
profit margin increased on equipment sales for the three and nine month period
ended March 31, 2010 compared to the fiscal 2009. Because projects were delayed
due to the freeze and constraints, the Corporation absorbed expenses related to
under-utilization of its technical staff during the March 2010 quarter. This is
particularly significant regarding the compensation levels for the more highly
skilled members of the staff, whose skills demand higher wages.

Despite the decrease in the March 2010 quarter, service revenues increased
during the nine-month period ended March 31, 2010 as compared to the prior year
in conjunction with increased demand for services during the first two quarters
of fiscal 2010. Demand for our products and services to date in the fourth
quarter of fiscal 2010 has increased due in part to the State of New Jersey's
resumption of purchases and to the easing of pent-up demand for IT products and
services. Despite the results reported herein, Management is cautiously
optimistic about the results for the remainder of fiscal 2010 and beyond.

Our service revenues are generated primarily by services including system
planning, design, configuration, installation and implementation, testing, and
optimization, often related to the sale and implementation of VoIP networks. In
the past year, Management refocused its attention on utilization rates of its
service technicians. As previously reported, project work has become the major
source of service revenue generation. Revenues are also generated by a variety
of support contracts with a number of corporate and Public Sector customers.
Under these agreements, which provide service and support for customers'
networks, personal computers, and peripherals, TransNet's Support Center
provides troubleshooting, diagnosis, and remedial services performed remotely by
skilled system engineers, who will be dispatched to perform on-site repairs, if
necessary. The agreements provide a range of guaranteed response times, based
upon the client's specific response requirements or the nature of the outage.
The availability of these services is determined by the client, from 24/7 to
next business day. These contracts are short-term, and contain provisions that
permit early termination. Although the contracts generally contain renewal
terms, there is no assurance that such renewals will occur. Our system engineers
and service technicians also provide service and support on an on-call basis. In
addition to these services, TransNet provides temporary and permanent staffing
and consulting services. Our staffing services are not a material source of
revenues, but these services carry higher profit margins than equipment sales.
This area of our operations was significantly impacted by the recession during
fiscal 2009 as businesses curtailed staffing and reduced their personnel levels.
During fiscal 2010, businesses were faced with special projects to perform
required upgrades, repairs and replacement of their networks despite the
recession. Because employers were reluctant to expand their own workforce,
TransNet's staffing operations experienced a strong demand for temporary IT
support specialists. Revenues generated by our

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staffing operations continue to improve as the demand for temporary employees
increases. Although no assurances can be given, we believe that as the economy
recovers and businesses begin to increase the number of employees, the demand
for our staffing services will be positively affected.

Management has directed attention to new service offerings that take into
account clients' cost constraints. The Corporation modified its service
offerings in response to industry fluctuations, and employs experienced and
specially certified systems engineers and project managers to respond to VoIP
projects. We believe our focus upon higher margin services related to VoIP/IP
Telephony and physical security will lead to growth and opportunities for the
Corporation. Our goal is to increase our profit margins further as we focus on
higher-end products and services flowing from security, communications, and data
center management. The complex products and services not only are
higher-margined items, but are also of pressing importance to our clients.

During the fiscal periods discussed, the Corporation performed under contract
awards for VoIP products and services, pending construction of the sites into
which the systems will be installed and implemented. Management notes that some
of these projects were affected by construction delays beyond the Corporation's
control, and these delays resulted in some order backlogs. Construction related
delays are typical in a number of projects because the Corporation's portion of
the project cannot be performed until a specified amount of the construction has
been completed and/or certain determinations made as to specifics of the project
due to customer-originated change orders. None of these delays had any
significant impact upon the operations of the Corporation.

As the economy slowly recovers from the recession, credit remains tight, and
clients often face reduced budgets. We are confronted by continued restrictions
on capital expenditures for many clients, who have restricted their IT budgetary
spending and scrutinized their IT spending and the related returns on
investments before incurring new expenses, often delaying purchases. As stated
above, Management responded by refocusing our attention on sales of higher
profit margin IT equipment, optimizing the utilization rates of its service
technicians, and reducing selling and administrative expenses. Management
believes that as a single-source provider, the Corporation will be in a better
position to satisfy client demands for cost-effectiveness and a suitable return
on investment. The VoIP networks marketed by TransNet are designed with the
capacity for "optimization" through the subsequent addition of layers of
solutions, for example, physical security solutions. We are confident that our
strategy of being an advanced solutions provider will result in future revenues
from clients' optimization of already installed networks. In conjunction with
these solutions, we note the technologies of the integration of voice, video,
and data that provide clients with new levels of operating efficiencies.

In addition to the challenging economic environment, the computer industry has
experienced a continuing trend of decreasing prices of computers and related
equipment. Management believes that this trend will continue. Industry-wide, the
result of price erosion has been lower profit margins on sales, which require
businesses to sell a greater volume of equipment to maintain past earning
levels. Another result of the price decreases has been intensified competition
within the industry, including the consolidation of businesses through merger or
acquisition, as well as the increased initiation of sales by certain
manufacturers directly to the end-user and the entrance of manufacturers into
technical services business. Management believes that the adoption of policies
by many larger corporate customers, which limit the number of vendors permitted
to provide goods and services for specified periods of time, has further
increased price competition.

During the quarter ended March 31, 2010, selling, general and administrative
expenses were 26% of revenue as compared to 25% for the comparative quarter in
the prior year. Similarly, selling, general and administrative expenses for the
nine-month period of fiscal 2010 and fiscal 2009 remained at 24% of revenues.
Actual expenses decreased significantly for both 2010 periods as the Corporation
undertook a number of staff reductions, and implemented salary freezes, salary
reductions, and other cost reduction

                                                                              12

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programs. The results of these cost-saving measures will be realized more fully
through the remainder of fiscal 2010 and forward. Management continues its
efforts to control expenses, despite increasing personnel related costs, such as
health benefits.

Interest income decreased in the quarter and nine-month period ended March 31,
2010 as compared to the comparative periods in fiscal 2009 as a result of lower
amounts invested. Interest expense increased in the quarter and nine month
period ended March 31, 2010 compared to prior periods as a result of increased
borrowing to fund equipment sales. The Corporation utilizes vendor credit
options, which provide more favorable terms.

LIQUIDITY AND CAPITAL RESOURCES

There are no material commitments of the Corporation's capital resources, other
than leases, third party lines of credit, and employment contracts.

Cash and cash equivalents decreased in the interim period ended March 31, 2010,
as cash was used to fund operations. Cash levels continue to be impacted by the
slow payment cycles of Public Sector clients and extended payment cycles from
some commercial clients as a result of the economic downturn. The Corporation
has entered into vendor credit arrangements to assist in purchasing inventory
and provide more flexibility with respect to cash. A significant portion of
vendor credit is secured by certain of the Corporation's assets.

The amount of cash received from or used by operating activities will vary based
on a number of business factors which may vary at different times, including
terms of available financing from vendors, and slowdowns or upturns in our
business or that of our customers. A decline in service revenues and/or a change
in the proportion of service revenues to total revenues may affect operating
cash flow as the bulk of the Corporation's service revenues are derived from
billing of our technical staff's services. The cash outlay for the labor/payroll
underlying these services is incurred on a semi-monthly basis. Billing is
determined by timeframes set by our clients.

Accounts receivable decreased at March 31, 2010 due to reduced revenues.
Extended payment cycles of commercial customers and governmental agencies
continue to affect our accounts receivable levels. Accordingly, Management
vigorously continues its efforts to expedite payments from the governmental
bodies and is working to implement more favorable payment schedules where
possible. Management notes that payment terms with governmental clients are
usually dictated by the client.

Inventories decreased at March 31, 2010 as a result of shipments to fill
existing open orders. The decrease in accounts payable at March 31, 2010 is
attributable to the overall reduction in equipment sales. Amounts outstanding
under the line of credit decreased because purchases were made using vendor
credit.

We require access to working capital from third party lines of credit and vendor
credit to fund our day-today operations, particularly at the end of our fiscal
quarters when demand for our products and services increase. We continue our
concerted effort to improve our working capital position and have implemented
measures to reduce headcount, streamline operations, and manage costs in
response to the impact of the recession. In conjunction with the tightening of
credit in the US economy, which has negatively impacted our access to credit,
Management has reviewed the Corporation's credit facilities and available vendor
credit and has taken steps to obtain the most favorable credit arrangements
available. Prior to 2009, the Corporation previously financed inventory
purchases through a credit line with a finance company, with a maximum credit
line of $2,500,000, which was terminated by the Corporation in fiscal 2009
because the modified terms were unfavorable. Management currently utilizes
various vendor

                                                                              13

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credit options, all of which provide the Corporation with more favorable payment
terms than those available under the prior credit line. Management believes that
its cash balance and access to credit will be sufficient to fund its operations
for the next twelve months. The unavailability of such credit going forward may
have an adverse impact upon the operations of the Corporation.

IMPACT OF INFLATION

The effects of inflation on our operations were not significant during the
periods presented.

CRITICAL ACCOUNTING POLICIES

The Corporation's financial statements are prepared in accordance with
accounting principles that are generally accepted in the United States. The
methods, estimates, and judgments used in applying these most critical
accounting policies have a significant impact on the results reported in the
financial statements. The Securities and Exchange Commission has defined
critical accounting policies as policies that involve critical accounting
estimates that require (a) management to make assumptions that are highly
uncertain at the time the estimate is made and (b) different estimates that
could have been reasonably used for the current period, or changes in the
estimates that are reasonably likely to occur from period to period, which would
have a material impact on the presentation of our financial condition, changes
in financial condition or in result of operations. Based on this definition, the
most critical policies include: revenue recognition, allowance for doubtful
accounts, and valuation of deferred tax assets.

INVESTMENT CONSIDERATIONS AND UNCERTAINTIES

THE MATTERS DISCUSSED IN MANAGEMENT'S DISCUSSION AND ANALYSIS AND THROUGHOUT
THIS REPORT THAT ARE FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT MANAGEMENT
EXPECTATIONS THAT INVOLVE RISK AND UNCERTAINTIES. POTENTIAL RISKS AND
UNCERTAINTIES INCLUDE, WITHOUT LIMITATION: THE IMPACT OF ECONOMIC CONDITIONS
GENERALLY AND IN THE INDUSTRY FOR IT PRODUCTS AND SERVICES; DEPENDENCE ON KEY
VENDORS AND CUSTOMERS; CONTINUED COMPETITIVE AND PRICING PRESSURES IN THE
INDUSTRY; PRODUCT SUPPLY SHORTAGES; OPEN-SOURCING OF PRODUCTS OF VENDORS,
INCLUDING DIRECT SALES BY MANUFACTURERS; RAPID PRODUCT IMPROVEMENT AND
TECHNOLOGICAL CHANGE, SHORT PRODUCT LIFE CYCLES AND RESULTING OBSOLESCENCE
RISKS; TECHNOLOGICAL DEVELOPMENTS; CAPITAL AND FINANCING AVAILABILITY; AND OTHER
RISKS SET FORTH HEREIN.

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ITEM 4. CONTROL AND PROCEDURES

The Chief Executive Officer and Chief Financial Officer of the Corporation have
concluded, based on their evaluation as of March 31, 2010, that the
Corporation's disclosure controls and procedures are not effective to ensure
that information required to be disclosed by the Corporation in the reports
filed or submitted by it under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms, and include controls and
procedures designed to ensure that information required to be disclosed by the
Corporation in such reports is accumulated and communicated to the Corporation's
management, including the Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure.

In light of this conclusion, the Corporation has initiated documentation of its
policies and procedures, and will institute compensating procedures and
processes as necessary to ensure the reliability of its financial reporting.
Management intends to remediate weaknesses in the control environment through
new resources and processes in its accounting department. Management believes
that its actions will continue to improve the Corporation's internal control
over financial reporting, as well as its disclosure controls and procedures.

There were no significant changes in the Corporation's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of such evaluation. The Corporation has commenced a review by its internal
staff, including its accounting staff, of new processes to provide an evaluation
of the level of controls and related procedures currently in place for each
process.

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                                     PART II
                                OTHER INFORMATION

ITEM 5. OTHER INFORMATION

SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

On March 10, 2010, the Corporation held its annual meeting of shareholders for
the purpose of considering and acting upon the election directors and
ratification of selection of independent public accountants. At the meeting, the
election of three nominated directors was approved.

Election of Directors:

         Name                           Shares Voted            Broker Non-Votes
----------------------------   ------------------------------   ----------------
                                  For      Authority Withheld
                               ---------   ------------------

Raymond J. Rekuc               1,752,192        442,309             1,286,654
Steven J. Wilk                 1,750,272        444,229             1,286,654
Susan M. Wilk                  1,710,147        484,354             1,286,654

Ratification of MSPC, Public Accountants and Advisors, a Professional
Corporation as independent public accounting firm

                                 For       Against   Abstain
                               ---------   -------   -------
                               3,062,372   392,053   26,730

REGULATION FD DISCLOSURE

On April 21, 2010, TransNet issued a press release announcing $1.1M IT award

RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 14, 2010, TransNet issued a press release reporting its results of
operations for the quarter and nine-month period ended March 31, 2010.

ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

      A. Exhibits -

         31.1 Certification required by Section 302

         31.2 Certification required by Section 302

         32 Certification required by Section 906

         99.1 Press Release dated April 21, 2010 announcing $1.1M IT award

         99.2 Press Release dated May 14, 2010 reporting TransNet's results for
              the quarter and nine month period ended March 31, 2010

      B. Reports on Form 8-K -

         On February 10, 2010, TransNet Corporation filed a Form 8-K under
         Item 7.01.

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                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        TRANSNET CORPORATION
                                        (Registrant)

                                        /s/ Steven J. Wilk
                                        ---------------------------------
                                        Steven J. Wilk, President and
                                        Chief Executive Officer

                                        /s/ John J. Wilk
                                        ---------------------------------
                                        John J. Wilk,
                                        Chief Financial Officer
DATE: May 17, 2010

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